Angi : Reports Q1 2024 Results

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ANGI REPORTS Q1 2024

Q1 operating income improves $14 million to $3 million

Q1 Adjusted EBITDA improves 21% to $36 million

DENVER- May 7, 2024-Angi Inc. (NASDAQ: ANGI) released its first quarter results today. A letter to IAC shareholders from Angi Inc, Chairman and IAC CEO Joey Levin is available on the Investor Relations section of IAC's website at ir.iac.com.

ANGI INC. SUMMARY RESULTS

($ in millions except per share amounts)

		Q1 2024		Q1 2023	Growth
Revenue	$	305.4	$	355.5	-14%
Operating income (loss)		2.7		(10.9)	NM
Net loss		(1.6)		(15.3)	89%
Diluted (loss) per share		(0.00)		(0.03)	89%
Adjusted EBITDA		36.0		29.7	21%

See reconciliations of GAAP to non-GAAP measures beginning on page 10.

Q1 2024 HIGHLIGHTS

• On April 8, 2024, Angi Inc. announced the appointment of Angi President Jeff Kip to CEO, succeeding Joey Levin. Joey Levin, CEO of IAC, will continue as Chairman of the Angi Board of Directors.
• Revenue was $305 million, down 14% year-over-year driven by declines across the Domestic business, partially offset by 18% International growth.
• Operating income increased $14 million to $3 million and Adjusted EBITDA increased 21% to $36 million driven by growth at Ads and Leads, Services and International.
• Transacting Service Professionals were 192,000 in Q1 2024, down 7% year-over-year though improving sequentially for the 3rd consecutive quarter.
• Monetized Transactions per Services Request increased 24% to 1.34.
• Between February 10, 2024 and May 3, 2024, Angi Inc. repurchased 3.2 million common shares for an aggregate of $7.1 million (average share price of $2.23 per share).
• For the full year 2024, Angi Inc. expects ($20)-$40 million of operating (loss) income and $120-$150 million of Adjusted EBITDA.

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Revenue

		Q1 2024		Q1 2023	Growth
($ in millions; rounding differences may occur)
Ads and Leads	$	249.6	$	293.5	-15%
Services		20.5		32.1	-36%
Total Domestic	$	270.0	$	325.6	-17%
International		35.4		29.9	18%
Total	$	305.4	$	355.5	-14%
Pro Forma Services Net Revenue					-28%
$	20.5	$	28.4
Total Pro Forma Angi Inc. Net Revenue	$	305.4	$	351.8	-13%

• Revenue was $305.4 million, down 14% year-over-year. Pro Forma revenue decreased 13%, reflecting the residual impact of the change to net revenue recognition for Services in Q1 2023, driven by:
• • Ads and Leads revenue decreasing 15% due to lower service requests driven by ongoing user- experience enhancements and homeowner and service professional acquisition optimizations
  • Services revenue decreasing 28% due to margin-optimization initiatives and lower service requests
  • International revenue increasing 18% driven primarily by a larger service professional network and higher revenue-per-service-professional

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Operating income (loss) and Adjusted EBITDA
		Q1 2024		Q1 2023	Growth
($ in millions; rounding differences may occur)
Operating income (loss):
Ads and Leads	$	19.8	$	13.5	47%
Services		(7.5)		(12.5)	40%
Corporate		(15.1)		(14.9)	-1%
Total Domestic	$	(2.8)	$	(13.9)	80%
International		5.5		3.0	82%
Total	$	2.7	$	(10.9)	NM
Adjusted EBITDA:
Ads and Leads	$	41.2	$	39.9	3%
Services		0.0		(2.2)	NM
Corporate		(11.9)		(12.4)	4%
Total Domestic	$	29.3	$	25.3	16%
International		6.7		4.4	53%
Total	$	36.0	$	29.7	21%

• Operating income increased $13.6 million to $2.7 million and Adjusted EBITDA improved 21% to $36.0 million driven by:
• • Ads and Leads operating income increased 47% to $19.8 million reflecting:
  • • Adjusted EBITDA increasing 3% to $41.2 million reflecting:
    • • Lower selling and marketing expense due to lower consumer marketing spend driven by improved efficiency and lower sales-related expenses
      • 15% lower revenue
    • $2.7 million lower amortization of intangibles
  • Services operating loss decreased 40% to $7.5 million reflecting:
  • • Breakeven Adjusted EBITDA compared to a loss of $2.2 million in Q1 2023 due primarily to lower sales and marketing as a result of improved unit economics and exiting complex services
    • $2.8 million lower stock-based compensation expense as a result of exiting complex services and lower overall headcount
  • International operating income increased 82% to $5.5 million and Adjusted EBITDA increased 53% to $6.7 million due primarily to an 18% increase in revenue and operating expense leverage

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Income Taxes

The Company recorded an income tax provision of $3.5 million in Q1 2024 due primarily to the impact of stock-based awards and unbenefited losses, partially offset by research credits. The Company recorded an income tax provision of $1.9 million in Q1 2023 despite a pre-tax loss, due primarily to the impact of stock- based awards and foreign income taxed at different rates, partially offset by research credits.

Operating Metrics
	Q1 2024	Q1 2023	Growth
Service Requests (in thousands)	4,126	6,004	-31%
Monetized Transactions (in thousands)	5,511	6,451	-15%
Monetized Transactions per Service Request	1.34	1.07	24%
Transacting Service Professionals (in thousands)	192	206	-7%

Free Cash Flow

For the three months ended March 31, 2024, net cash provided by operating activities attributable to continuing operations was $22.3 million, a $1.1 million increase year-over-year. Free Cash Flow increased $0.2 million to $9.5 million due primarily to higher Adjusted EBITDA, partially offset by unfavorable working capital and $0.9 million higher capital expenditures.

Three Months Ended March 31,

($ in millions; rounding differences may occur)		2024		2023
Net cash provided by operating activities	$	22.3	$	21.2
Capital expenditures		(12.8)		(11.9)
Free Cash Flow	$	9.5	$	9.3

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LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2024:

• Angi Inc. had 503.4 million Class A and Class B common shares outstanding.
• IAC's economic interest in Angi Inc. was 84.3% and IAC's voting interest in Angi Inc. was 98.2%.
• Angi Inc. had $363 million in cash and cash equivalents and $500 million of debt (due August 15, 2028), which was held at ANGI Group, LLC (a subsidiary of Angi Inc.).

Between February 10, 2024 and May 3, 2024, Angi Inc. repurchased 3.2 million common shares for an aggregate of $7.1 million (average share price of $2.23 per share).

During the fourth quarter of 2023, Angi Inc. announced its intent to utilize the remaining 14.0 million shares in its stock repurchase authorization. As of May 3, 2024, Angi Inc. had 4.7 million shares remaining in its stock repurchase authorization, pursuant to which share repurchases can be made over an indefinite period of time in the open market and in privately negotiated transactions, depending on those factors management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

CONFERENCE CALL

IAC and Angi Inc. will host a conference call to answer questions regarding their first quarter results on Wednesday, May 8, 2024, at 8:30 a.m. Eastern Time. This conference call will include the disclosure of certain information, including forward-looking information, which may be material to an investor's understanding of IAC's and Angi Inc.'s businesses. The conference call will be open to the public at ir.angi.com and ir.iac.com.

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DILUTIVE SECURITIES

Angi Inc. has various dilutive securities. The table below details these securities as well as potential dilution at various stock prices (shares in millions; rounding differences may occur).

				Avg.
			Exercise			As of
	Shares			Price			5/3/24		Dilution At:
Share Price					$	2.54	$ 3.00	$ 4.00	$ 5.00	$ 6.00
Absolute Shares as of 5/3/24	501.7						501.7	501.7	501.7	501.7	501.7
SARs	0.4	$	3.01			-	-	-	0.1	0.1
Options	0.4	$	11.41			-	-	-	-	-
RSUs and subsidiary denominated equity awards	28.8						7.5	7.5	7.4	7.4	7.3
Total Dilution							7.5	7.5	7.4	7.5	7.4
% Dilution							1.5%	1.5%	1.5%	1.5%	1.5%
Total Diluted Shares Outstanding							509.2	509.2	509.1	509.2	509.1

The dilutive securities presentation is calculated using the method and assumptions described below, which are different from those used for GAAP dilution, which is calculated based on the treasury stock method.

The Company currently settles all equity awards on a net basis; therefore, the dilutive effect is presented as the net number of shares expected to be issued upon exercise or vesting, and in the case of options, assuming no proceeds are received by the Company. Any required withholding taxes are paid in cash by the Company on behalf of the employees assuming a withholding tax rate of 50%. In addition, the estimated income tax benefit from the tax deduction received upon the exercise or vesting of these awards is assumed to be used to repurchase Angi Inc. shares. Assuming all awards were exercised or vested on May 3, 2024, withholding taxes paid by the Company on behalf of the employees upon net settlement would have been $34.5 million, assuming a stock price of $2.54 and a 50% withholding rate. The table above assumes no change in the fair value estimate of the non-publicly traded subsidiary denominated equity awards from the values used at March 31, 2024. The number of shares ultimately needed to settle these awards and the cash withholding tax obligation may vary significantly as a result of the determination of the fair value of the relevant subsidiary. In addition, the number of shares required to settle these awards will be impacted by movement in the stock price of ANGI.

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GAAP FINANCIAL STATEMENTS

ANGI INC. CONSOLIDATED STATEMENT OF OPERATIONS
($ in thousands except per share data)
		Three Months Ended March 31,
		2024		2023
Revenue	$	305,390	$	355,497
Cost of revenue (exclusive of depreciation shown separately below)		12,497		16,937
Gross profit		292,893		338,560
Operating costs and expenses:
Selling and marketing expense		157,051		199,610
General and administrative expense		85,521		96,667
Product development expense		23,756		25,312
Depreciation		23,849		25,190
Amortization of intangibles		-		2,662
Total operating costs and expenses		290,177		349,441
Operating income (loss)		2,716		(10,881)
Interest expense		(5,038)		(5,029)
Other income, net		4,484		3,807
Earnings (loss) from continuing operations before income taxes		2,162		(12,103)
Income tax provision		(3,479)		(1,884)
Net loss from continuing operations		(1,317)		(13,987)
Loss from discontinued operations, net of tax		-		(1,013)
Net loss		(1,317)		(15,000)
Net earnings attributable to noncontrolling interests		(314)		(325)
Net loss attributable to Angi Inc. shareholders	$	(1,631)	$	(15,325)
Per share information from continuing operations:
Basic loss per share	$	(0.00)	$	(0.03)
Diluted loss per share	$	(0.00)	$	(0.03)
Per share information attributable to Angi Inc. shareholders:
Basic loss per share	$	(0.00)	$	(0.03)
Diluted loss per share	$	(0.00)	$	(0.03)
Stock-based compensation expense by function:
Selling and marketing expense	$	1,232	$	1,252
General and administrative expense		7,193		8,761
Product development expense		972		2,699
Total stock-based compensation expense	$	9,397	$	12,712

ANGI INC. CONSOLIDATED BALANCE SHEET ($ in thousands)

ASSETS

Cash and cash equivalents

Accounts receivable, net

Other current assets

Total current assets

Capitalized software, leasehold improvements and equipment, net Goodwill

Intangible assets, net Deferred income taxes Other non-current assets, net

TOTAL ASSETS

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:

Accounts payable

Deferred revenue

Accrued expenses and other current liabilities

Total current liabilities

Long-term debt, net

Deferred income taxes

Other long-term liabilities

Commitments and contingencies

SHAREHOLDERS' EQUITY:

Class A common stock

Class B convertible common stock

Class C common stock

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive income

Treasury stock

Total Angi Inc. shareholders' equity

Noncontrolling interests

Total shareholders' equity

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

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			December 31,
	March 31, 2024		2023
$	363,337	$	364,044
	60,810		51,100
	57,662		72,075
	481,809		487,219
	99,893		109,527
	885,234		886,047
	170,612		170,773
	147,258		148,183
	50,169		54,466
$	1,834,975	$	1,856,215
$	30,534	$	29,467
	50,084		49,859
	161,606		179,329
	242,224		258,655
	496,241		496,047
	3,034		2,739
	50,433		54,266
	-		-
	109		107
	422		422
	-		-
	1,454,684		1,447,353
	(232,650)		(231,019)

4421,187

(183,983) (177,283)

1,039,024 1,040,767

4,0193,741

1,043,043 1,044,508

$ 1,834,975 $ 1,856,215

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ANGI INC. CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
	Three Months Ended March 31,
		2024		2023
Cash flows from operating activities attributable to continuing operations:
Net loss	$	(1,317)	$	(15,000)
Less: Loss from discontinued operations, net of tax		-		(1,013)
Net loss attributable to continuing operations		(1,317)		(13,987)
Adjustments to reconcile net loss to net cash provided by operating activities
attributable to continuing operations:
Depreciation		23,849		25,190
Provision for credit losses		15,910		23,731
Stock-based compensation expense		9,397		12,712
Non-cash lease expense (including impairment of right-of-use assets)		4,752		3,532
Deferred income taxes		1,253		(282)
Amortization of intangibles		-		2,662
Other adjustments, net		384		(366)
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable		(25,761)		(22,402)
Other assets		13,320		4,758
Accounts payable and other liabilities		(17,417)		(10,289)
Operating lease liabilities		(4,487)		(4,578)
Income taxes payable and receivable		2,148		845
Deferred revenue		265		(354)
Net cash provided by operating activities attributable to continuing operations		22,296		21,172
Cash flows from investing activities attributable to continuing operations:
Capital expenditures		(12,798)		(11,862)
Purchases of marketable debt securities		-		(12,362)
Proceeds from sales of fixed assets		6		10
Net cash used in investing activities attributable to continuing operations		(12,792)		(24,214)
Cash flows from financing activities attributable to continuing operations:
Purchases of treasury stock		(6,860)		-
Withholding taxes paid on behalf of employees on net settled stock-based awards		(3,214)		(1,379)
Net cash used in financing activities attributable to continuing operations		(10,074)		(1,379)
Total cash used in continuing operations		(570)		(4,421)
Net cash used in operating activities attributable to discontinued operations		-		(2,111)
Net cash provided by investing activities attributable to discontinued operations		-		57
Total cash used in discontinued operations		-		(2,054)
Effect of exchange rate changes on cash and cash equivalents and restricted cash		(141)		179
Net decrease in cash and cash equivalents and restricted cash		(711)		(6,296)
Cash and cash equivalents and restricted cash at beginning of period		364,301		322,136
Cash and cash equivalents and restricted cash at end of period	$	363,590	$	315,840

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RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

($ in millions; rounding differences may occur)

RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA

		For the three months ended March 31, 2024
				Stock-based
	Operating income		compensation
		(loss)		expense		Depreciation	Adjusted EBITDA
Ads and Leads	$	19.8	$	4.5	$	16.9	$	41.2
Services		(7.5)		1.4		6.1		0.0
Corporate		(15.1)		3.2		-		(11.9)
Total Domestic		(2.8)		9.0		23.1		29.3
International		5.5		0.4		0.8		6.7
Total	$	2.7	$	9.4	$	23.8	$	36.0

				For the three months ended March 31, 2023
				Stock-based
	Operating income		compensation				Amortization of
		(loss)		expense		Depreciation		intangibles	Adjusted EBITDA
Ads and Leads	$	13.5	$	5.5	$	18.2	$	2.7	$	39.9
Services		(12.5)		4.2		6.1		-		(2.2)
Corporate		(14.9)		2.6		-		-		(12.4)
Total Domestic		(13.9)		12.3		24.3		2.7		25.3
International		3.0		0.4		0.9		-		4.4
Total	$	(10.9)	$	12.7	$	25.2	$	2.7	$	29.7